When Marilan Luttrell purchased 62 acres near Ellicott, she planned to live a peaceful, rural life in the home in which she grew up. She purchased the property that her father sold in 1996. Although she maintains the rural life, it’s anything but peaceful; thanks to a notification she received from the Colorado Division of Water Resources.According to the letter, the Cherokee Metropolitan District has applied for a determination of right to the water beneath her property. “By these applications Cherokee Metropolitan District claims control of the groundwater under your property by virtue of a set of leases recorded in the El Paso County Records,” the notification stated. And, the letter also stated that the Cherokee district is seeking a determination of water rights for the Laramie-Fox Hills, Arapahoe and Denver aquifers.In addition to Luttrell, 84 other property owners in the area received the notification. Some property owners, such as Carol Nadeau, also are in the path of the Prairie Falcon Parkway Express, or the “Super Slab,” making the Cherokee claim a double blow.Most property owners had no knowledge that a previous owner had leased the water beneath their property.Luttrell organized a meeting to discuss the issues. Douglas Bruce, county commissioner representing Ellicott, Marsha Looper, state representative for District 19, property owners and water experts attended the Sept. 21 meeting.Looper said in 1954 seven owners of more than 5,000 acres leased their water to Edwin Hayes of the Cimarron Corp. Since then, the land has been sold and divided into about 150 parcels.”Hayes got these leases in the 1950s for $175 or $200 a year and $5 per acre-foot,” Bruce said. “Hayes had the right to sell the leases, and he sold them to what eventually became the Cherokee district.””Water is considered a property right in Colorado and can be separated from the land,” Looper said.Bruce said that an ambiguous transfer of interest clause in the leases makes it unclear as to whether the water interest was actually severed from the land. He also said he has seen an addendum to at least one lease that retains “any and all water needed for two single households and all agricultural uses” for the lessor.According to a county policy that allows utility companies to dig alongside the shoulder of county roads, the Cherokee district can physically bring the water from Ellicott to their customers. The policy requires that they restore the shoulder when the project is completed.In a separate interview, Kip Peterson, Cherokee’s general manager, said the Cherokee board decided to move forward on the leases in late 2004. “We are doing the responsible thing for the district by developing all possible resources,” Peterson said.”Denver Basin water is historically deep and expensive to access. Other districts have drilled 1,000 feet for $250,000 and gotten 25 gallons per minute. Before the district went to great expense for water that is relatively limited in nature, the board decided to move slowly and deliberately and apply for the water rights and the quantification.”Peterson said the Cherokee district has no other similar leases. Bruce said he confirmed that statement with Jim Culichia, Cherokee’s attorney.The Cherokee district already operates alluvial wells on some of the properties affected by the district’s request for determination of water rights, Peterson said.”The leases have been recorded since the 1950s. A title search should have uncovered them,” Peterson said. “Property sellers should have disclosed them.”Some sellers did disclose the leases, and royalty payments made by Cherokee for the leases were transferred to the property’s new owner. Property owner Jim Burnside did know about the lease when he bought. He said Cherokee has renegotiated his lease “a couple of times, and it got more lopsided [in Cherokee’s favor] each time.” Other sellers or their heirs have continued to receive royalty payments, which Kip Peterson estimated at $1.4 million.Looper said the leases are “in perpetuity.” Bruce said the Supreme Court has already upheld the validity of leases in perpetuity in a case involving the Cherokee district, as long as the lessee continues to make annual royalty payments.But the leases did not show up on some deeds or title insurance polices, so many property owners didn’t know about the leases. Sandy Hook, manager of the El Paso County Clerk and Recorder’s office, said the county goes back to 1861 in microfilm. “The leases are in books and microfilm. It’s just not easy to find them,” Hook said.”On microfilm, you have to search every month and every year. I would think they [the leases] would come up if they [the title company] did an extensive search. Some title companies just take the last title search and go forward. In the 1950s, microfiche indexes were handwritten. A lot of indexes are not strictly alphabetical. You might have all Bs together, but the entire B group might not be alphabetized.””If you bought property and got title insurance, and it does not contain an exception for water, contact your title insurance company,” Bruce told the audience at the meeting.Sara Fears, title manager at Land Title in Colorado Springs, = said water rights are excluded from coverage in a typical title insurance policy, but it is standard practice to show recorded documents on a title insurance policy. She said her company includes a disclaimer about water rights on the title insurance policy.Besides verifying what’s in the title insurance policy, property owners should get to know their well levels.Looper said if a property owner in a designated basin can prove that his or her well level has dropped because of Cherokee’s future activities, the property owner can go to the groundwater commission and seek compensation. “The best way to prove injury is to have your water levels monitored now,” Looper said. However, property owners who are not in a designated basin cannot claim an injury if their water levels go down, she said.Hydrogeologist Julia Murphy recommended quarterly monitoring for alluvial wells and twice-a-year monitoring for wells in the Denver Basin. “It’s important for adjacent property owners to monitor their wells,” Murphy said. If Cherokee gets the water rights and starts taking water, it is likely to affect property owners throughout the area, she added.Kathy Hare, president of the Upper Black Squirrel Creek Groundwater Management District, said the district cannot protect the water rights of individual property owners within the district. “But we will fight Cherokee if they try to export water from these properties out of the district,” Hare said.Looper said she thinks objections from property owners will cause the groundwater commission to hold a hearing.”I think they [Cherokee] recognize they can’t just go ahead without some kind of negotiation,” Bruce said.Peterson said he expects the issue to be decided sometime in the next six months. “We don’t have the legal right to take every drop,” he said.Luttrell encouraged all well owners in the county or the state to send a letter of protest to the groundwater commission and to appear at quarterly groundwater commission meetings.Luttrell delivered 408 letters of protest from Ellicott-area property owners to the groundwater commission in Denver. “If they get away with it on our land, they will get your water, too,” she said.
